electronic signature adoption
By Brad Powell

There are many problems you can solve with electronic signature applications. Some of the most common reasons for implementation are reducing risk, decreasing cost, and offering a better and more convenient product to members at your credit union. And we all know that the next generation of members expects to be able to electronically sign financial instruments on their devices of choice.

Despite those benefits, many credit unions and banks stall on electronic signature applications. The reason is adoption. They fear that once electronic signatures are implemented, the member will still revert to paper.

The fear is not baseless. Getting adoption is not easy. But you can learn from what one credit union has done to achieve more than 90 percent adoption. Though we would love to take credit for the results, success requires a collaborative effort.

First, some background: This credit union had a thriving lending business, but they realized that they risked losing market share if they could not accelerate the lending process. Their newer, younger members also expected to do more of their tasks electronically.

The solution they settled on was a new electronic signature process for loans. If executed correctly, the e-signature process would enable faster turn-around internally and quicker delivery for members.

But this only made sense if the members embraced electronic signatures in large numbers. The industry standard adoption rate of 60 to 80 percent was okay, but they wanted more. To be worth it for this credit union, the e-signature project had to eclipse 80 percent adoption.

In the end, their adoption rate exceeded 90 percent. Here are four reasons I believe they met and surpassed their goal:

1. They Understood — and Leveraged — Standards

The laws regulating electronic signatures are complex. Credit unions, banks and other enterprises that use e-signatures need to navigate federal E-SIGN laws, state laws that fall under the Universal Commercial Code (UCC) and more. These standards can be intimidating.

However, if your credit union understands these standards, you can really improve an electronic signature implementation by choosing the simplest ways to meet regulatory requirements.

For example, the rules for many types of electronic signature applications don’t require the customer to imitate a signature by signing with their finger, nor do they mandate a scanned image of their signature. Simply typing in a name ─ or even just initials ─ is legally sufficient in a most situations.

2. They Kept It Simple and Short

Simplifying the process is important in matters that aren’t governed by standards, too, of course. For instance, many times when you run into a signature application online, you are forced to go to another website or use a different login to complete the process. Or the application requires you look at facsimile of a contract. Those systems them expect the user to take a guess to try to pick the right points and initial them.

It’s almost always more complicated than it needs to be. And in fact, some vendors even benefit from making the process seem complex. Similarly, many electronic signature applications are too long. Every minute and every click you require from the member increases the chance they will drop out of the application process.

When a member abandons the electronic loan-signing process (either to apply using a more traditional application or to give up on the loan altogether), you have lost the entire advantage of using e-signatures. Your goal should be to make every step as easy as possible for members. Focus on the user experience. If you have to do extra work internally to make it better for users, do it.

3. They Gave Members Time to Think

When people shop for retail goods online, there’s the “Add to Cart” button and the “Check Out” button. Most people don’t hesitate to add an item to their cart. But they always take a moment – or more ─ before checking out.

The final stage of an electronic loan application is similar. Once the member has filled out the application and received a reply that says they have been approved, they’re faced with a real commitment. When they click or tap the “Accept” button, they’re on the hook for a loan.

This is a great place to give the applicant the ability to say, “You know, let me think about this.” It may be that they just want to go over the math one more time. Or they may want to consult with their spouse or significant other. If you give them the opportunity to come back in a reasonable amount of time and complete the process when they’re ready, you’ll find that the vast majority of those people do.

4. They Involved All Parties from the Outset

On any project like an e-signature application, we advocate that the line of business leaders and the technology team meet early and often. They need to sit in the same room and make sure they understand each other’s perspective if they’re going to create a successful product.

On an electronic signature project, you need to add one more group to the mix from the start: your legal team. Some organizations run projects like this and wait till the end to bring in legal.

After creating something that the business and technology teams agree is a great e-signature application process, they send it off for a legal review. Often, the legal team returns with hundreds of questions. The line of business and IT realize that addressing them will require a lot of changes.

That means extra work and usually a delayed launch. And even worse, the end product is less user-friendly and less member-friendly than all parties had hoped, and the adoption rate is put in jeopardy.

If you involve the legal team from the outset, however, the same issues will be addressed ─ but at a time where user- and member-friendly solutions are still achievable. You’ll know that the system is in compliance with legal standards throughout the process, and each side will stay in step as development moves ahead. This collaboration delivers both a smoother development process and a better final product.


Do these four elements of our credit union client’s strategy have something in common? I’d say it’s a consistent focus on the member. Electronic signature applications can help a credit union by increasing efficiency and growing the bottom line. But the only way to do that is by putting customers and their experience first.

Hopefully you can see that by following a straightforward process, you can achieve great results without too much angst. Like the credit union we profiled above, you can get rapid and wide adoption by focusing on the member experience, embracing standards, fostering collaboration, and leveraging the experience and expertise of others. You don’t need to fear e-signature applications in your credit union if you simply follow the steps we outlined above.


Compliance and Your Credit Union

Does your credit union:

• Face an daunting burden of regulatory requests?
• Struggle to manage the multiple experts inside and outside your organization who must respond to exam requests?
• Use email for regulatory communication -- possibly opening yourself to legal discovery?
• Receive the same request more than once but provide a different answer each time?

If these challenges sound familiar, Axiaware's new credit union compliance software product, Redboard, could help.

Learn More About Redboard